When you owe the IRS money, the first letter you get requests full payment. Every additional letter, telephone call, and personal meeting begins with the same demand. Sometimes taxpayers can write the check, but more times than not, there is no ability to pay the debt immediately.
Some who cannot full pay are candidates for an Offer in Compromise. Most citizens just need time to pay the debt and are eligible for an Installment Agreement.
The IRS says “Pay it now or we will levy your paycheck and bank account”. It is up to the taxpayer to propose a payment plan.
The most common question I get is “Will the Installment Agreement stop penalty and interest from accruing?” Unfortunately, it does not.
If you owe the IRS under $50,000, they will give you a six-year payment plan. If your debt is between $50,000 and $100,000 they will give you seven years to pay. If you cannot afford those payments or you owe over $100,000, we submit financial documents and information to show an inability to pay. The IRS will then accept what the individual has remaining every month after paying reasonable living expenses.
The payments do not go on forever. There is a 10 year Statute of Limitations. If the IRS does not collect within that time, the debt goes away.
If you have any questions about Installment Agreements or any other IRS Program, call me at 305-682-1118.